Professional Accounting Blog

    Accounting For Your Prosperity

    Peter DeMarco

    Peter DeMarco, with nearly three decades of tax planning experience, is a Vice President at Meaden & Moore as well as Director of the Tax Services Group.

    Recent Posts

    Key Tax Elements in Governor Kasich’s Budget Proposal

    Posted by Peter DeMarco on Feb 5, 2015 8:56:35 AM

    Topics: Tax Planning & Strategies

    Governor Kasich set forth his plan to take Ohio to greater heights when he presented his fiscal year 2016-17 budget proposal. The key tax elements of his plan are:

    Tax Cuts:

    • 23% across-the-board reduction in tax rates (the highest rate of 5.33% will drop to 4.1%)
    • Small business owners, including pass-through entities (PTE’s), will pay no income tax on business income when the gross receipts are less than $2M
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    Tax Increase Prevention Act of 2014

    Posted by Peter DeMarco on Dec 18, 2014 1:04:13 PM

    Topics: Tax Planning & Strategies

    On December 16, Congress approved the Tax Increase Prevention Act of 2014, a tax bill that extends over 50 tax breaks. The breaks, otherwise known as “extenders” include individual and business provisions that expired on December 31, 2013, and renewed for one year, retroactive to January 1, 2014. The bill is now on its way to the President, who is expected to sign it.

    Taxpayers should review their personal and business tax situation and consider taking steps in the next few weeks to take advantage of the 2014 extenders, as the extenders will not be available in 2015 unless Congress once again approves them.  Following is a brief summary of extenders.  For a complete list, you can download the PDF here. Please contact your Meaden & Moore Client Service Representative or Angelina Milo (amilo@meadenmoore.com) for more details.

    Individual Tax Extenders

    • Tax deduction of state and local general sales taxes in lieu of state and local income taxes - Taxpayers who itemize their deductions on a Schedule A may elect to deduct state and local general sales taxes paid, rather than state and local income taxes. This provision is most beneficial to taxpayers who reside in states with no or low income taxes (i.e. Florida).
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    3 Smart Year-End Tax Moves for Business Owners

    Posted by Peter DeMarco on Dec 16, 2014 9:46:43 AM

    Topics: Tax Planning & Strategies

    Although April 15 is four months away, there are multiple steps that business owners can take to help reduce the 2014 tax burden. Below, we're sharing 3 examples of tax breaks that business owners can use to their advantage before the end of 2014.

    1. Consider a Stock Redemption

    If your business is incorporated, consider taking money out of the business by way of a stock redemption if you are in the position to do so. They buy-back of the stock may yield long-term capital gain or a dividend, depending on a variety of factors. But either way, you'll be taxed at a maximum rate of 23.8% instead of at the highest marginal rate of 39.6%.

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    Ready or Not – Here Comes FATCA!

    Posted by Peter DeMarco on Aug 14, 2014 8:00:00 AM

    Topics: Tax Planning & Strategies

    Most people hear FATCA and automatically think foreign and banks. While many of the rules do apply to foreign financial institutions, the FATCA documentation requirements are far more reaching than financial institutions.  Nearly all domestic entities, regardless of type or size, will have some aspect of FATCA apply to them.

    FATCA stands for Foreign Account Tax Compliance Act and became law in March of 2010.  The main thrust of FATCA is to reduce tax evasion by U.S. citizens or residents who invest outside of the U.S. or indirectly earn income inside or outside the U.S. through a foreign entity. While FATCA is not intended to raise revenue, it does, effective as of July 1, 2014, impose a 30% withholding tax on “withholdable payments.”  “Withholdable payments”  are certain expenditures made to FFIs (Foreign Financial Institutions) and NFFEs (Non-Financial Foreign Entities) when such entities are non-compliant with the FATCA documentation requirements. The 30% rate is not reduced by tax treaty. 

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    What Your Business Needs to Know About Taxes in Other States

    Posted by Peter DeMarco on Oct 18, 2013 11:31:00 AM

    Topics: Tax Planning & Strategies

    Because it's the most convenient option, the majority of businesses start up in their home state. For some companies though, business activities aren't quite as straightforward as that. Perhaps your business has opened branches or franchises out-of-state, or you happen to have a business partner or employee who lives in another part of the country. Even serving customers in other states can complicate matters when tax time rolls around.

    Though doing business in multiple states is rewarding, it can also be difficult if you don't have a firm understanding of the regulations that may affect you. In this post, we will address some of the most frequently asked questions that businesses have about multi-state business affairs and taxation.

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    Social Security Checks and Tax Filing

    Posted by Peter DeMarco on Sep 26, 2013 9:10:00 AM

    Topics: Tax Planning & Strategies

    Collecting social security benefits marks a significant milestone in your life. After a lifetime of contributions, receiving benefits is a reward for your hard work. Before you draw your first social security check, as part of your overall retirement planning strategy, you'll want to understand how your benefits will affect your taxes.  

    Federal Tax Filing  

    The federal government taxes most social security recipients. Individual taxpayers who earn more than $25,000 -- and couples filing jointly who earn more than $32,000 -- pay federal taxes on up to 50 percent of  their benefits. Higher-income taxpayers pay federal taxes at their marginal tax rate on up to 85 percent of their social security income. The good news is that 15 percent of your benefits aren't taxed at all.  

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    How Much Life Insurance Do I Need at Retirement?

    Posted by Peter DeMarco on Sep 24, 2013 9:24:00 AM

    Topics: Family Business & Succession

    Deciding how much life insurance to carry into retirement should be oneaspect of everyone’s retirement planning strategy.  While most retirement planning focuses on saving up enough money for retirement and investing it wisely, life insurance still may play an important role in people’s financial situation after retirement.  The following is a brief guide to help people who are nearing retirement or just recently retired consider what level of life insurance coverage they want to carry in the coming years.  The Primary Purpose of Life Insurance  
    The primary purpose of life insurance is to financially provide for loved ones after you pass away.  During your working years, life insurance is generally meant to replace one’s salary in the event of a tragedy.  Retirement calculators and financial advisors try to estimate how much life insurance it would take to replace your salary, based on rates of return.  
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    The Risks and Penalties of Payroll Tax Avoidance

    Posted by Peter DeMarco on Sep 20, 2013 12:37:00 PM

    Topics: Tax Planning & Strategies

    If you're an employer, you already know how deep an obligation you have to your employees. You may also know how surprisingly complex, and unending, payroll tax compliance can be. Just accounting for payroll taxes within the countless other additional taxes, fees and expenses involved when you own or manage a business can make eking out a sliver of profit seem a formidable challenge. 

    Because payroll taxes are both significant and ongoing as an expense, it's understandable that you might be tempted to find some way to minimize your payroll tax obligation.  Many managers or owners have just one casual discussion with the wrong advisor, and subsequently, are a fine line away from dealing with a tough minded enforcement arm of the IRS or other state agency.

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    The Grouping Election: How it Can Reduce Your Medicare Tax Burden

    Posted by Peter DeMarco on Aug 27, 2013 10:56:00 AM

    Topics: Tax Planning & Strategies

    The new Medicare tax takes effect this year, and for top earners who are business owners that can mean a tax rate increase of up to 3.8%. While the increase can be significant, there are ways that the owners can limit their burden. 

    First and foremost, you may be asking yourself what exactly this change in tax law is and why it has come about. The new Medicare Tax was established out of the Health Care and Education Reconciliation Act, which passed in 2010 as a reaction to concerns about the lack of future funding available for Medicare. As mentioned above, the maximum threshold imposes a 3.8% tax on net investment income when that income surpasses a specific amount.

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    First-time Abatement: A Second Chance for a First-Time Tax Mistake

    Posted by Peter DeMarco on Aug 20, 2013 8:37:00 AM

    Topics: Tax Planning & Strategies

    Each year, taxpayers are expected to file their returns and pay their taxes, knowing that if they fail to do so, they could face hefty penalties and fines. Let’s say you are an honest taxpayer and one year you don’t pay your taxes. This could have happened for a variety of reasons such as major disasters or IRS error. You may be surprised to know that a program exists that helps taxpayers who find themselves in one of these unfortunate situations. Enter: First-time Abatement.

    First-time Abatement (FTA) is an IRS penalty waiver program that offers the option to receive penalty relief to taxpayers during a single tax period. The taxpayer has either failed to file their returns (FTF), failed to pay (FTP) their taxes due, or failed to make a deposit on an installment program (FTD), and is now being fined (potentially significantly). In order to receive the waiver, the taxpayer must demonstrate full compliance for the past three years, and, according to an April 2013 update, must be current with filing and payment requirements. The program provides a way for well-meaning taxpayers who make a mistake for the first time to avoid penalties.

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